2018 (1) TMI 65 - AT - Insolvency and Bankruptcy

Corporate Insolvency Resolution Process - Held that - In the present case, as we find that there is no illegality or infirmity committed by Adjudicating Authority in admitting the application under Section 7 of the I&B Code , we find no ground to interfere with the impugned order. For the said reasons also this Appellate Tribunal has no jurisdiction to accept the settlement reached between the parties to annul the impugned order, though it is open to the Appellants to move before a court of competent jurisdiction for appropriate relief. As during the Resolution Process , the Resolution Professional is required to ensure that the Company remains on-going and if so necessary, he may take assistance of the (suspended) Board of Directors. The authorised person of the Corporate Debtor , who is authorised to sign the bank cheques may issue cheque only after authorisation of the Resolution Professional . The bank account(s) of the Corporate Debtor(s) can be allowed to be operated for day-to-day functioning of the companies and its projects and for payment of current bills of the suppliers, salaries and wages of the officers, employees /workmen, electricity and water bills, etc.

Summary

Issues involved:
Admission of application under Section 7 of the Insolvency and Bankruptcy Code, 2016; Settlement reached between the parties after admission of application; Jurisdiction of Adjudicating Authority to recall the order of admission; Request for withdrawal of application; Authority of the Appellate Tribunal to accept settlement and annul the impugned order; Interim order of protection; Role of Resolution Professional during the Resolution Process.

Analysis:
The appeal was filed against the order passed by the Adjudicating Authority admitting the application under Section 7 of the Insolvency and Bankruptcy Code, 2016, initiating the Corporate Insolvency Resolution Process and appointing an Interim Resolution Professional. The Appellant sought to set aside the process due to a settlement reached with the Financial Creditor after the impugned order was passed. However, it was argued that once the application is admitted, the applicant cannot withdraw it, as per Rule 8 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016.

The Respondent, while acknowledging the settlement, highlighted that it occurred post the order's issuance and only partial payment was made. The Tribunal emphasized that the Adjudicating Authority, having validly admitted the application, lacked the jurisdiction to recall the admission order. The Tribunal referenced the rule allowing withdrawal of an application before admission, indicating that post-admission settlements do not permit withdrawal. Consequently, the Tribunal found no grounds to interfere with the order, asserting its lack of jurisdiction to accept the settlement to annul the order.

The Appellate Tribunal dismissed the appeal, stating that there was no illegality in the Adjudicating Authority's decision to admit the application. The Tribunal clarified that the Appellants could seek relief from a competent court, but the Tribunal itself could not intervene. Additionally, the Tribunal declined to grant interim protection as it did not overturn the impugned order. It stressed the Resolution Professional's role in ensuring the Company's ongoing operations, specifying the authorization required for financial transactions during the Resolution Process to maintain day-to-day functions and payments.

In conclusion, the appeal was dismissed with observations on the Adjudicating Authority's decision, emphasizing the limitations on withdrawal post-admission and the Resolution Professional's responsibilities during the process. No costs were awarded in this matter.